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The document summarizes a case filed against automobile manufacturers for restricting access to spare parts and repair information. The Competition Commission of India found that the manufacturers violated competition laws and imposed a penalty. It directed the manufacturers to allow independent sellers and repairers access to genuine spare parts and diagnostic tools, in order to give consumers more choice. The Commission also said manufacturers could include reasonable IP protection provisions in agreements.
The document summarizes a case filed against automobile manufacturers for restricting access to spare parts and repair information. The Competition Commission of India found that the manufacturers violated competition laws and imposed a penalty. It directed the manufacturers to allow independent sellers and repairers access to genuine spare parts and diagnostic tools, in order to give consumers more choice. The Commission also said manufacturers could include reasonable IP protection provisions in agreements.
The document summarizes a case filed against automobile manufacturers for restricting access to spare parts and repair information. The Competition Commission of India found that the manufacturers violated competition laws and imposed a penalty. It directed the manufacturers to allow independent sellers and repairers access to genuine spare parts and diagnostic tools, in order to give consumers more choice. The Commission also said manufacturers could include reasonable IP protection provisions in agreements.
Case No. 03/2011 Date: 25/08/2014 FACTS OF THE CASE Mr. Shamsher Kataria had filed the information against Volkswagen India, Honda India and Fiat India for violation of Section 3(4) and Section 4 of the Competition Act, 2002. It was alleged by the informant that the aforementioned Original Equipment Manufacturers (hereinafter referred to as OEMs) entered into agreements with Original Equipment Suppliers (hereinafter referred to as OESs) and authorized dealers, which imposed unfair prices on the sale of auto spare parts and restricted the free availability of genuine auto spare parts in the market. These vertical agreements hindered the OESs from selling the auto spare parts directly to the independent car users and repairers in the market. It was further alleged that the OEMs did not furnish the technological information, diagnostic tools and software programs that are required to maintain, service and repair the technologically advanced automobiles to the independent repairers in the open market. CONT.... This led to the OEMs carrying out restrictive trade practices with their authorized dealers and thus denying market access to independent repairers. The OEMs also charged high and arbitrary prices to the consumers for maintenance services and supply of spare parts. The informant, Mr. Kataria, also stated in the information that the governing authorities on anti-competitive practices of various countries like USA and Europe have dealt with cases of the similar nature and implemented corrective measures in the automobile manufacturing sector. The informant, Mr. Kataria, also stated in the information that the governing authorities on anti-competitive practices of various countries like USA and Europe have dealt with cases of the similar nature and implemented corrective measures in the automobile manufacturing sector. Following this, the Director General (hereinafter referred to as DG) investigated into the case. The DG sought detailed information from the various OESs, authorized dealers, independent repairers, SPX India Ltd and the automobile industry associations during the investigation. The DG observed that the 14 car manufacturing companies were involved in the violation of Section 3(4) and Section 4 of the Competition Act (hereinafter referred to as the Act). The DG held that the denial of market access stemmed from the denial to access diagnostic spare parts and tools. ISSUES OF THE CASE
Whether the automobile market as a whole is a single
unified systems market or there exists separate relevant markets at different stages? Is there any abuse of dominance by the OEMs in the spare parts market? Whether the OEMs are entitled to the benefits arising out of statutory exemption provided to agreements related to intellectual properties? Whether agreements entered into by the OEMs with OESs and authorized dealers are anti-competitive in nature? OBSERVATION OF THE CASE The Competition Commission of India directed the OEMs to cease and desist from anti-competitive practice, to allow the OESs to sell genuine spare auto parts in open market and to formulate an effective system to ensure availability of aftermarket spare parts, diagnostic tools and other relevant information in the public domain.6 The Commission imposed a penalty upon the 14 car manufacturing companies of 2% of their total turnover in India and ordered them to submit a compliance report within 180 days. The primary motivations of the Commission while granting the order were: i. to enable the consumers accessibility to spare parts and to exercise their freedom of choice while choosing between independent repairers and authorized dealers and ii. to enable the independent repairers to participate in JUDGEMENT OF THE CASE It also held that necessary and reasonable provisions can be made by the OEMs in their agreements relating to the IPR protection. The Commission also directed the OEMs not to impose an absolute condition on the consumers in case of them availing the services of the independent repairers. However, from the point of view of liability and safety, required safeguards may be put in place.